Melstacorp reports solid December on key segment performance

Melstacorp PLC reported some solid financial performance for the three months ended in December 2024 on the back of improved performance from some business segments that was possible from improving top-lines and margins which also helped from lower direct costs

The diversified conglomerate reported revenues of Rs.68.06 billion for the October – December quarter, up 7.3 percent from the same period in 2023, but expanded its gross margin to 34.2 percent, up by 220 basis points from a year ago due to direct costs coming in lower from a year ago period.

The top-line was predominantly supported by its beverage segment represented by its alcoholic beverage giant, Distilleries Company of Sri Lanka PLC which showed some solid top and bottom-line performance for the quarter.

In fact the beverage segment revenues rose by a robust 23.4 percent from a year ago to Rs.38.35 billion.

It was followed by its financial services business portfolio of which the revenues grew by 27.9 percent to Rs.2.02 billion.

The plantation segment did well with the revenues coming in at Rs.2.39 billion, up 14.5 percent. The performance has been driven by the group’s Balangoda and Madulsima Plantations whose performance was helped by higher auction prices which remained for much the year for tea.

The group’s tourism segment, second largest by revenue, did revenues of Rs.17.47 billion, down 13.5 percent from a year ago. While the Sri Lankan tourism segment did well, South Asian and Middle Eastern segments saw a slight decline which perhaps was due to the rupee appreciation.

Group’s other key segment, maritime, freight and logistics also did well with revenues of Rs.4.31 billion, up 13.3 percent from a year ago.

However, the strategic investments, services and telecommunication saw their revenues coming down in the December quarter from the same period a year ago.

At the operating level, the company reported a profit of Rs.13.17 billion, up by a strong 22.3 percent reflecting the strength in the group’s operating level performance.

The operating margin also expanded to 19.3 percent from 17.0 percent.

The group reported earnings of Rs.4.09 a share or Rs.4.77 billion for the December quarter compared to Rs.2.50 a share or Rs.2.92 billion in the year earlier period, translating into 63.6 percent.

Apart from the operating level performance, the earnings were supported by the nearly 40 percent increase in the finance income to Rs.1.08 billion which appears to have been possible from the 42.4 percent increase seen in the other non-current financial investments of the group.

The finance cost slightly increased by 5.6 percent to Rs.2.69 billion as the bank overdraft increased notably, offsetting what could have been a positive impact from the decline in the market interest rates.